If you’re like many Seattleites that have bad credit, getting a loan that you need can be a challenge. If you have less than perfect credit, a cosigner can help you qualify for a car loan in Seattle because they agree to share responsibility for the loan with you.
Cosigner Basics and Requirements in Seattle
A cosigner is someone who signs the loan contract with you, and agrees to share responsibility for making sure the loan is paid on time. With a bad credit auto loan, it’s possible for a lender to require you to have a cosigner in order to approve you. However, this isn’t the only reason why you might want to add one.
Even if a cosigner isn’t required, it may benefit you to put them on the loan. If you add a cosigner, you could get a better interest rate, which reduces the overall cost of the loan and lowers the monthly payment. Plus, you may be able to select a shorter loan term than you'd be able to without the cosigner, which also helps you save money in the long run.
So, what are typical cosigner requirements? Seattle lenders have a few rules concerning whether or not someone can be a cosigner, which basically boils down to them being able to qualify for the loan on their own.
This means they must meet the minimum income requirement set by the lender. They also have to have a good credit score, typically over 700. Finally, they have to have enough disposable income to afford the payments. The lender is going to "debt out" the cosigner by calculating their debt to income ratio, and it generally has to fall at 50% or lower.
The Risks Involved in Cosigning a Car Loan
Sure, adding a cosigner to a car loan can help you get approved, but you have a heightened responsibility of making sure payments are made on time because your actions affect your cosigner as well.
If you stop making payments, both you and your cosigner’s credit scores are going to drop, and the late payments are going to show up on both of your credit reports. Not to mention, the lender can go after your cosigner for any missed payments.
On top of this, the cosigner doesn’t own the vehicle even though they signed the loan contract with you. Their name isn’t on the title, and they can’t just take the car from you if you decide to no longer make payments.
It’s important that you and your cosigner set ground rules ahead of time, and that you keep in touch while the loan is open to discuss any issues as they come up.
Working with the Right Seattle Dealer
Now that you know how a cosigner helps you qualify for an auto loan, are you ready to get started on your car buying journey in Seattle? If so, Auto Credit Express is here to point you in the right direction.
We help people in Seattle, and the rest of the country, find financing by connecting them to local dealerships that have the right lending resources available. To get started, all you need to do is complete our easy, free, and no-obligation auto loan request form. After that, we’ll get right to work connecting you to a dealer in your area!